Fonterra has reported a half year profit after tax of NZ$729 million, which is up 8% on the corresponding period in 2024.
The New Zealand dairy co-op said that operating profit in the first half of FY25 stood at $1.1 billion, an increase of 16% on a year previous.
There was a 10% rise in earnings per share to 44 cents, while a decision has been made to pay an interim dividend of 22 cents per share.
Fonterra
Fonterra also narrowed its forecast farmgate milk price 2024/25 to NZ$9.70 – $10.30 per kilogramme of milk solids (MS) with the midpoint standing at $10.00 per kgMS.
The co-op said that forecast milk collections for the year are up 2.7% on this time last year to 1,510 million kgMS.
This follows favourable pasture growth across most of New Zealand earlier in the season.
Fonterra chief executive Miles Hurrell said that the company is focusing on driving value which includes delivering strong financial performance while achieving the highest sustainable farmgate milk price.
He said that projects are underway to “unlock manufacturing production capacity for our ingredients and foodservice channels”.
“As we focus on delivering the strongest farmer offering, we have announced new funding for farmers with lower emissions milk and expanded the fixed milk price programme that farmers can use to get more certainty around the farmgate milk price,” he added.
Hurrell said that Fonterra is seeing “good demand” for its products, and its teams have worked to optimise the product portfolio to capture value from the market conditions.
“We have also optimised the current season’s advance rate schedule to get cash to farmers sooner, underpinned by our balance sheet strength.
“In terms of milk flows, our noting many parts of the country are currently experiencing very dry conditions,” he said.
Fonterra said its strong half year performance was “underpinned by an optimised product mix, designed to capture value across the co-op’s sales channels”.
“Ingredients channel performance has been a highlight this half, with sales volume down 3.9% and operating profit up $229 million to $696 million, reflecting better margins and improved product mix.
“Our foodservice channel has seen sales volume growth of 8.3% this half, with Q2 gross margins significantly up on Q1 as pricing adjusted to the higher milk price.
“Foodservice operating profit for the half was a healthy $230 million, compared to the record high of $342 million in FY24 when input costs were much lower.
“The consumer channel saw good sales volumes, up 8.5%, and margin growth, despite the higher farmgate milk price, with operating profit largely flat on prior period at $173 million,” Hurrell said.
Outlook
Fonterra recently increased its FY25 full year forecast earnings range to 55-75 cents per share.
“The co-op is in a great shape, with milk collections, the forecast farmgate milk price and earnings performance all up on this time last year.
“As we look to the balance of the year ahead, we’re focused on maintaining this momentum in performance, while progressing delivery of our strategy, including the dual-track consumer divestment process which is on track as planned,” Hurrell said.
